Monday, March 24, 2008

Emonomics

Berreby offers an entertaining review of Ariely's new book "Predictably Irrational," which deals with behavioral economics - the experimental study of what people actually do when they buy, sell, change jobs, marry and make other real-life decisions. The book is a concise summary of why today’s social science increasingly treats the markets-know-best model as a fairy tale.
To see how arousal alters sexual attitudes, for example, Ariely and his colleagues asked young men to answer a questionnaire — then asked them to answer it again, only this time while indulging in Internet pornography on a laptop wrapped in Saran Wrap. (In that state, their answers to questions about sexual tastes,, violence and condom use were far less respectable.) To study the power of suggestion, Ariely’s team zapped volunteers with a little painful electricity, then offered fake pain pills costing either 10 cents or $2.50 (all reduced the pain, but the more expensive ones had a far greater effect). To see how social situations affect honesty, they created tests that made it easy to cheat, then looked at what happened if they reminded people right before the test of a moral rule. (It turned out that being reminded of any moral code — the Ten Commandments, the non-existent “M.I.T. honor system” — caused cheating to plummet.)

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